2 Ways to Stop Churn and Increase NRR
Reflections of the Gainsight Pulse 2021 Conference
Last week I had the pleasure of speaking to 168 people at the Gainsight Pulse conference. We were amazed at the turnout and are grateful to Gainsight for giving us the opportunity to share our point of view on the matter of customer retention and growth strategies. Overall the conference was very focused on the impact of renewals on things like net recurring revenue and profitability; reducing customer churn and ensuring customers are getting full value from their vendors.
The objective of my session was to give people the HOW. My topic was about helping these customer success managers elevate their conversation with executives in order to retain business and grow share of wallet. I shared a few things with them during the session, but most importantly how to align their respective narratives to business and financial speak in order to gain their attention and engagement.
During my session, I explained that speaking in the language of business and financial value at any point in the customer journey can create a virtuous cycle of winning.
Here’s why that’s important:
According to ProfitWell and a study of 50K participants they showed the correlation between discounting deals upfront to secure business and what happens after the fact during renewals. I highlighted from the study, that the more you discount a deal, the higher your chances of reduced NRR are, and worse, the higher your chances of churn. In other words, when we discount more than 30% we are setting ourselves up for failure when it comes time for renewal. Companies giving 25%-50% discounts see 10%-20% higher churn rates than those not giving discounts, the study found.
These are terrible numbers for any CRO. But how do you stop it?
Easy. 2 ways:
- Position and differentiate your solution based on the business value and business outcomes you can deliver both in a qualitative and quantitative fashion. This will elevate your conversations and differentiate you from the competition. They will speak in features and functions while you will command and control the opportunity to win. There are a number of ways to do this well, value selling methodologies, customer profiling, and analysis, targeted messaging, account-based marketing strategies, but critical to driving this type of selling motion is a “customer value-based mindset” and value selling tools and capabilities. These typically come from visionary value engineers and/or their visionary CRO or CEO.
- Prove the value you deliver well before your next renewal. Well before your next renewal. A good customer value management platform that helps you calculate the economic impact, based on a digital, cloud-based platform, should also be able to help meter usage of your solution, leverage the value model built and used in that selling scenario to help you digitally calculate the value a customer is actually receiving every time they execute or automate through your solution.
DecisionLink’s powerful value realization capabilities empowers companies to create an end-to-end thread of value, from initial pitch to renewal and beyond. With value integrated at every step of the customer journey, you have the power to create a virtuous circle of customer value to build customers for life.
To prove this theory out, we shared the Crowdstrike case study that discusses the empowerment their reps and customer success managers are experiencing with the ValueCloud.
It was a fun session, the chatbox filled up with tons of great questions and comments like “this is awesome”, “how do I get more info”, etc. It was so engaging that at one point one of our users from ServiceNow chimed in to give us a 2-minute testimonial on their use of ValueCloud! Suffice to say, that was the real highlight of the session for me!
My POV on the matter of retention and growing share of wallet (i.e. NRR): Marketing and then Selling Value upfront means you WIN. Proving Value means you win again. And again, and again…